A trade group representing municipal gas utilities has renewed its call for Congress to revise the Natural Gas Act (NGA) to give shippers on interstate natural gas pipelines the authority to request refunds if their rates have been over-recovered.
In letters to the Senate Energy and Natural Resources Committee and the House Energy and Commerce Committee Thursday, the American Public Gas Association (APGA) said it is seeking parity with its electric customer counterparts. "Just as Congress fixed Federal Power Act (FPA) Section 206 in 1988 to provide the Federal Energy Regulatory Commission (FERC) with the authority to provide refunds for over-recovering [of transmission rates of electric customers], Congress should now provide FERC with that same authority under NGA Section 5" for gas customers, APGA President Bert Kalisch wrote.
"The FERC's ability to exercise its authority under FPA Section 206 is not retroactive ratemaking. Therefore, to harmonize FERC's NGA Section 5 authority to FPA Section 206 would not provide the FERC with retroactive ratemaking authority. Any refund monies, charged and collected by a pipeline in excess of its rate of return, would only include those sums collected from and after the date a NGA Section 5 complaint is initiated against the offending pipeline," he said.
The NGA currently only allows for prospective relief for gas consumers in Section 5 complaint cases -- after an agency decision is issued, which more often than not occurs years after a complaint is filed. Gas pipeline shippers have found the length of time involved in reaching a decision at FERC to be a deterrent to filing complaints about over-recovery of costs.
"All FERC commissioners, without regard to party affiliation, have decried this absence of refund authority under NGA Section 5," Kalisch told the committees.
To make its case for changing the NGA, the APGA cited a recent study by the Natural Gas Supply Association of 32 major interstate gas pipelines. It found that -- using 12% as a nominal target allowed return -- the pipelines over-recovered their costs by $4.1 billion during a five-year period (2005-2009). Seven of the 32 pipelines exceeded 18% return on equity.
The refrain for Congress to give FERC the authority to order refunds for gas shippers is not new. In April 2009 20 groups representing large gas consumers and small municipal users, including the APGA, called on Sen. Jeff Bingaman (D-NM), chairman of the Senate Energy Committee, to back legislation that would reform Section 5 of the NGA, making customers eligible for rate refunds from the date that they file a complaint at FERC (see Daily GPI, April 7, 2009).
They signaled their strong support for legislation, sponsored by Sen. Maria Cantwell (D-WA), that would have set the effective date for rate refunds as early as when a complaint case is filed under Section 5 of the NGA. The measure withered in Congress that year, and it's unknown whether it will be re-introduced.
The issue also was raised at last year's GasMart by Dave Ciarlone, manager of global energy services for aluminum producer Alcoa Inc. (see Daily GPI, May 13, 2010). "If you're an end-user, you're probably being overcharged" because of the inability of pipeline shippers to seek refund of overcharges, he said.
Ciarlone dismissed claims that granting gas shippers refund authority would amount to retroactive ratemaking. "That's a term that I reject on its face...No one is talking about going back and redoing the rules of what fuel costs are. We're just talking about going back and making sure the revenues collected produce the rate of return allowed."
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